May 5, 2009 / 8:54 PM / 9 years ago

UPDATE 2-Kinross quarterly profit rises, eyes new mines

* Net profit $76.5 million vs $70.9 million

* Gold production up 69 pct to 526,888 oz (Adds details. In U.S. dollars, unless noted)

By Cameron French

TORONTO, May 5 (Reuters) - Kinross Gold (K.TO) said on Tuesday its first-quarter profit rose a less-than-expected 7.9 percent, as a sharp jump in revenue was partially offset by higher depreciation charges.

Canada’s No. 3 gold producer earned $76.5 million in the quarter ended March 31, up from a profit of $70.9 million in the year-before period. On a per-share basis, profit slipped to 11 cents from 12 cents, due to a higher share float.

Stripping out $5.6 million foreign exchange gain, Kinross earned $70.9 million, or 10 cents per share, falling short of the profit of 15 cents a share expected by analysts polled by Reuters Estimates.

Gold equivalent production — a measure that includes silver production counted as an equivalent value in gold — jumped 69 percent to 526,888 ounces, while costs per ounce eased to $419 from $472.

Revenue climbed 61.2 percent to $532.7 million, but this was partially offset by depreciation charges that nearly tripled to C$111.2 million.


Kinross said its expanded Paracatu mine in Brazil should hit full design capacity by the end in the second quarter.

The Paracatu expansion, along with last year’s opening of the Kupol mine in Russia and the Buckhorn mine in Alaska, are part of an expansion expected to boost the company’s annual output 32 percent to as much as 2.5 million ounces this year.

Speaking on a conference call with analysts, Kinross Chief Executive Tye Burt said the company is now looking ahead to its next round of new mine openings, which should begin to start yielding ounces as early as 2011.

These include the Fruta del Norte project in Ecuador, which is now set to progress with a new mining law in that country, the recently-acquired Lobo-Marte project in Chile and the Cerro Casale project, also in Chile.

Kinross said in March it expected Cerro Casale to cost $3.6 billion to build, but Burt noted the study was done in mid-2008 when the costs of construction materials was much higher.

“Of course, we’d expect costs to improve from there in this environment and with optimization work now in progress,” he said.

Kinross owns 49 percent of the project, while Barrick Gold Corp (ABX.TO) owns the rest.

Kinross said it had cash and short-term investments of $746.5 million at March 31.

It has also filed a preliminary shelf prospectus to issue up to $1 billion in shares and debt securities, but said it has no current plans to do so.

Burt said the extra liquidity capacity of the prospectus was not for any specific purpose, but could be used to meet future funding commitments at new mines.

The company’s shares fell 9 Canadian cents to C$19.20 on the Toronto Stock Exchange. The results were released after markets closed. (Reporting by Cameron French; Editing by Andre Grenon )

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